Question 32.32. Which of the following bonds generally has the lowest interest rate? (Points : 2)

Treasury bonds Corporate Baa bonds Municipal Aaa bonds Corporate Aaa bonds

Question 33.33. The expectation of accelerating inflation and rising interest rates could logically be expected to: (Points : 2)

raise short term interest rates relative to long term rates raise bond prices flatten the yield curve cause borrowers to shun/avoid short term borrowing

Question 34.34. "An approximation of the yield to maturity that equals the yearly coupon payment divided by the price of a coupon bond" --- this definition best describes: (Points : 2)

yield on a discount basis current yield actual return to investors truncated annual return none of the above

Question 35.35. The explicit cost incurred in making an exchange is called: (Points : 2)

waiting costs fiat costs transactions cost seignoriage

Question 36.36. The difference in yields of a corporate Aaa bond versus a Treasury bond is due primarily to: (Points : 2)

default risk interest rate risk reinvestment risk

Question 37.37. To say that stock prices follow a "random walk" is to argue that: (Points : 2)

stock prices rise, then fall, then rise again-sequentially stock prices rise, then fall in a predictable pattern stock prices tend to follow trends stock prices cannot be predicted based on past trends

Question 38.38. Your full service stock broker would (assuming that he knows some finance): (Points : 2)

prefer to have you think that financial markets are highly efficient prefer to have you think that financial markets are inefficient not care any whether you think financial markets are efficient or inefficient prefer that you believe there is no way that a "January effect" could exist

Question 39.39. Mean reversion refers to the observation that (Points : 2)

stock prices overreact to news announcements stock prices are more volatile than fluctuations in their fundamental value would predict stocks with low returns are likely to have high returns in the future stocks with low returns are likely to have even lower returns in the future

Question 40.40. According to the efficient market hypothesis, the current price of a financial security (Points : 2)

is the discounted net present value of future interest payments is determined by the highest successful bidder fully reflects all available relevant information is the result of none of the above